Pound (GBP) slumps on dovish BoE rate decision
The pound (GBP) faced heavy selling pressure on Thursday, following the Bank of England’s (BoE) first interest rate decision of the year.
While the BoE left rates on hold at 3.75% as expected, the 5-4 vote split was far narrower than expected and prompted GBP investors to price in a more aggressive pace of easing from the BoE in 2026.
Looking ahead, Sterling may face further losses through the remainder of the week as Prime Minister Keir Starmer remains under pressure over the Mandelson-Epstein scandal.
Euro (EUR) steady as ECB leaves rates on hold
The euro (EUR) traded sideways on Thursday as markets digested the European Central Bank’s (ECB) own interest rate decision.
The ECB also left rates on hold, with the bank confident that inflation will stabilise at its 2% target, despite the euro’s recent strength.
Meanwhile, Germany’s latest industrial production figures may drag on the euro today after reporting a larger-than-expected contraction in factory output in December.
US dollar (USD) gains curtailed by weak jobs data
The US dollar (USD) opened yesterday’s session on strong footing, benefitting from its safe-haven status amid broad market instability.
However, the ‘greenback’ then relinquished the bulk of these gains later in the day, following weaker-than-expected US labour data.
Closing out this week’s session is the publication of the University of Michigan’s latest US consumer sentiment index, with a deterioration in morale potentially pressuring the US dollar.
Canadian dollar (CAD) pressured by soft oil prices
The Canadian dollar (CAD) ticked lower on Thursday as a dip in oil prices limited the appeal of the commodity-linked currency.
Canada will publish its latest jobs report later today. Expect CAD sentiment to weaken if unemployment remained elevated last month.
Australian dollar (AUD) buoyed by RBA rate hike bets
The Australian dollar (AUD) trended higher overnight on Thursday as investors began to price in another interest rate hike from the Reserve Bank of Australia (RBA) in May.
New Zealand dollar (NZD) firms as risk appetite rebounds
The New Zealand dollar (NZD) also firmed in overnight trade, amid an improving market mood.
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